Enrollment Trends a Key Risk to Health Insurers

The difference between the age distribution assumptions made when insurers set premium rates on their exchange products and the actual age distribution will be a key determinant of the products’ financial results, according to Fitch. The more these pricing assumptions skew younger than actual experience, the greater the potential is for health insurers to experience adverse financial results from exchange-sourced business. It also increases the importance of risk sharing programs built into the ACA. This is especially true for insurers offering individual and small group products on state or Health and Human Services Department (HHS) managed health insurance exchanges.
According to HHS, as off Dec. 28, 2013, 24% of exchange enrollees were 18 to 34 years old. A Kaiser Foundation Family report estimates that number at 40%. Fitch says that healthy 18-34-year-olds who are eligible for exchange enrollment are more likely to delay their enrollment compared to older, less healthy people. The 2014 enrollment period remains open until March 31, 2014.
The HHS report indicates that eight times as many 18 to 34 year olds enrolled in an exchange-sponsored health insurance plan in December than in October and November. For more information, visitwww.fitchratings.com.